Supreme Court Strikes Down Student Debt Plan

June 30, 2023

But the question here is not whether something should be done; it is who has the authority to do it.

United States Supreme Court Chief Justice John Roberts writing the majority opinion for the court, which ruled 6-3 to strike down the Biden administration’s program to cancel or decrease student loan debt (aka “loan forgiveness”) for more than 40 million Americans.

What To Know: In 2022, the Department of Education announced a plan to provide student debt relief for up to 43 million borrowers, canceling up to $10,000 or $20,000 for some borrowers and erasing the full remaining balance for roughly 20 million borrowers. The total cost of the program was calculated at more than $400 billion. Six states with Republican attorneys general and two student borrowers sued, arguing that the plan violated a 2003 law called the HEROES Act, which allows the Secretary of Education to “waive or modify” laws applicable to federal student financial assistance programs so that borrowers are not placed in a worse position financially due to a national emergency.

The Court ruled that federal law does not authorize the Department of Education to cancel student debt, writing: “The Secretary asserts that the HEROES Act grants him the authority to cancel $430 billion of student loan principal. It does not. We hold today that the Act allows the Secretary to ‘waive or modify’ existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, not to rewrite that statute from the ground up.” Chief Justice Roberts explained further that “precedent— old and new—requires that Congress speak clearly before a Department Secretary can unilaterally alter large sections of the American economy.”

Big Picture: The decision comes less than a month after it was announced that a separate and unrelated student loan payment pause, which first began in March 2020 in response to COVID–19 pandemic, will end later this summer.

According to the latest figures, student loan debt, including federal and private loans, has exceeded $1.77 trillion.

President Biden announced new plans to protect student loan borrowers in wake of the decision. He said the “new approach” will “take longer” but will allow the Secretary of Education “to compromise, waive, or release loans under certain circumstances.”

Read the Supreme Court’s opinion HERE

by Jenna Lee,